Federal Court Guts Net Neutrality Rules

A federal appeals court today nullified key provisions of the FCC’s net neutrality rules, opening the door to a curated approach to internet delivery that allows broadband providers to block content or applications as they see fit.

The 3-0 decision by the U.S. Court of Appeals for the District of Columbia Circuit guts much of a 2010 Federal Communications Commission order, in a challenge brought by Verizon. The nation’s number one mobile provider successfully argued that the regulatory agency overstepped its authority because it issued the rules in 2010 without classifying broadband providers as common carriers, like rank-and-file telcos.

While it’s a nuanced legal argument, the effects are huge.

Here’s the rules that were negated:

*Wireline or fixed broadband providers may not block lawful content, applications, services, or non-harmful devices. Mobile broadband providers may not block lawful websites, or block applications that compete with their voice or video telephony services.

*Fixed broadband providers may not unreasonably discriminate in transmitting lawful network traffic. That rule, however, does not apply to wireless services.

FCC Chairman Tom Wheeler is mulling whether to continue the litigation. His options include asking the court to rehear it with the same three judges or with a larger, en banc panel, or going directly to the Supreme Court.

“We will consider all available options, including those for appeal,” Wheeler said, “to ensure that these networks on which the internet depends continue to provide a free and open platform for innovation and expression, and operate in the interest of all Americans.”

If the decision stands, broadband providers are likely to implement pay-to-play plans like the one AT&T announced last week — plans that many said violated, at a minimum, the spirit of net neutrality.

The second largest mobile provider is taking advantage of the data caps it imposes on subscribers by letting companies sponsor the bandwidth their wares use. The consumer who enjoys those sponsored services will not have that broadband count against their monthly data allotment. Sponsorship is not mandatory — if a company doesn’t pay AT&T, the bandwidth will count against the user’s cap as always.

However, under today’s ruling, AT&T conceivably could demand that companies like Netflix or others pay to be carried on their pipes.

The decision could also be a boon for anti-piracy measures. The providers would be free to throttle BitTorrent traffic or to block file-sharing sites altogether.

“Without high-level rules of the road, or other replacement high-level rules, the broadband carriers are free to discriminate and block content from consumers,” Chris Lewis, a vice president at digital rights group Public Knowledge, said in a telephone interview.

The appeals court ruled that the regulations it nullified are akin to those assigned to “common carriers,” like brick-and-mortar telephone services, which are heavily regulated, from everything including rates to interconnections.

“Because the Commission has failed to establish that the anti-discrimination and anti-blocking rules do not impose per se common carrier obligations, we vacate those portions of the Open Internet Order,” the appeals court wrote.

Adding broadband providers into the common carrier legal thicket would give the FCC the power to reinstate the regulations. But doing so could open the door to regulating the internet in ways that might hamper its progress by mandating rates, interconnectedness and perhaps even speeds.

Free Press president Craig Aaron said under today’s ruling “broadband providers will race to turn the open and vibrant Web into something that looks like cable TV. They’ll establish fast lanes for the few giant companies that can afford to pay exorbitant tolls and reserve the slow lanes for everyone else.”

The Competitive Enterprise Institute hailed the decision, saying “net neutrality is another example of over regulation that flies in the face of every proper tenet of infrastructure wealth creation and expansion of free speech and consumer welfare.”

For what it’s worth, the appeals court left intact a net-neutrality rule requiring wireless and wireline broadband providers to disclose the network management practices, performance characteristics, and commercial terms of their services.

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